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Daily Bitcoin and Crypto Analysis

Daily BTC Analysis

September 2, 2021
Bitcoin has rallied 2% today, but has outperformed the wider market once again. It was Bitcoin's rally at the end of July that sparked the resurgence of interest in the wider crypto market. The stall in prices since the one print above $50,000 has now seen the Bitcoin dominance indicator drop to its lowest level since May 19th, the day when Bitcoin crashed 14%.

On previous tops, the alt market has outperformed and continued to rally while Bitcoin has lagged. Is this just a rotation of Bitcoin profits into alts, or should we be more concerned at the market's ability to maintain prices?

Even with the end of summer upon us, activity across the Bitcoin world is still lower than we would like to see. Both outflows and inflows to exchanges are muted.

We are seeing the rotation from Bitcoin into alts in real-time: with wallets of 10 BTC...

...Wallets of 1 BTC, and...

...smaller retail holders of 0.1BTC all showing the same behavior—selling.

We flagged this after we printed $50,000 and failed to hold it. The reaction of short-term holders would be to sell this dip, as fear of not taking some off the table at $50,000 would prove too much to contemplate, having just witnessed Bitcoin trading below $30,000.

The rotation in alts, driven in part by a buoyant NFT market, could be covering the signs of an early crack in this rally.

The flip side of this is that Bitcoin has been moving to derivatives exchanges and funding rates are creeping higher, which are both indications that the dip is being bought by leveraged traders.

Which is great if we go up, but no so good if we go down. Leveraged longs equal auto-liquidations, something that we haven't witnessed for a while.

One last thing to flag, the mempool is very quiet.

The demand for Bitcoin is clearly low, but we just rallied from $30,000 to $50,000, so we can assume this rally was not driven by retail, but instead by whales.

Maybe Bitcoin just isn't as exciting as a JPEG of an ape?

Technical Analysis

We saw interesting price action in Bitcoin today, as it tried to launch off the 200-day moving average and spring higher. Higher lows are now forming on the chart; however, a break above the neckline at $49,300 is required for Bitcoin's price to work its way higher. On the downside, the support levels to watch are $46,000 and $44,000, with $40,000 seen as solid.

Bitcoin had another volatile day inside a reasonably tight trading range with a failed attempt above $48,000, followed by a failed attempt below the $46,800 support. Near term direction is more sideways action as this gives many alt coins the opportunity to rally. The ETH/BTC pair looks extraordinarily bullish.

There is an unchanged view on the weekly chart, with a bullish wave structure and targets of $57,500, ATH of $65,000, and $87,000. The MACD and RSI Oscillators are tracking nicely.

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